Posted: September 9, 2022, 07:42 AM.
Last updated: September 9, 2022, 07:42 AM.
Since early 2021, when MGM Resorts International (NYSE:MGM) offered more than $11 billion for the company, Entain Plc (OTC:GMVHY) has been seen as one of the gaming industry’s top takeover targets, but Ladbrokes owner sees himself more as a hunter than prey.
Entain CEO Jette Nygaard-Andersen at an investor presentation. She is the company that is not for sale. (Image: Sky News)
Later in 2021, merger talks between Entain and DraftKings (NASDAQ:DKNG) were dissolved after the latter made a bid of $22.4 billion in cash and stock after previously offering $20.5 billion. After fighting off the barbarians at the gate, Entain CEO Jette Nygaard-Andersen sees her company positioned as more of a buyer than a seller.
We are not a company for sale,” she said in an interview with Bloomberg. “I am very focused on growing this company. I see Entain as the consolidator.”
Her comments could destroy hopes that MGM would return to the negotiating table with a higher offer for its BetMGM partner. The two gaming companies each own 50% of what is the largest iGaming provider in the US and one of the largest online sportsbook operators.
Entain CEO Walking the Walk
When it comes to Entain’s position as a buyer, not a target, Nygaard-Andersen backs that claim with a lot of action.
This year, the Coral owner is in one of his own deals, acquiring at least five gaming companies for more than $1 billion combined. Last month, Entain announced that it is acquiring 75% of Croatia-based SuperSport Group. In February, Entain announced it was paying nearly $235 million to acquire Deis Ltd., the parent company of Avid Gaming. It is an effort to strengthen its footprint in Canada’s recently liberalized sports betting market.
Those are just two examples, but those trades underscore the point that if Entain itself was actively shopping, it probably wouldn’t be a buying binge.
The operator’s shopping serves a different purpose. With the added weight and potential share price appreciation, Entain becomes more expensive for MGM or any other lover. Some analysts believe it would take a premium of at least 20% of its current market cap to get Entain to the negotiating table, but that price, due to the stock’s decline this year, is lower than what MGM previously offered and less. than half of DraftKings’s bids. .
What’s next for Entain/MGM relationship
MGM managers have made it clear that they would like to have full control over BetMGM. It is not possible that a dream can be realized, but the casino operator would have to make an attractive offer to get Entain interested.
Even that may not be enough for the UK-based gaming company. In the Bloomberg interview, Nygaard-Andersen was optimistic about the 2022 US football season and amid a regulatory crackdown in his home market, the geographic diversification attributable to BetMGM’s stake is compelling for Entain and its shareholders.
While it is undoubtedly lower than the price to buy from Entain, it would not be cheap to buy it from BetMGM due to the increasing market share of the sportsbook operator and the fact that it is profitable.
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